When you’re preparing to buy a property, your borrowing capacity plays a critical role in determining what and where you can afford to purchase.

But did you know that simply having a credit card, even one you rarely use, could significantly reduce how much you can borrow?

Many buyers are surprised to learn that lenders assess your credit card limit, not your actual balance, when calculating your borrowing power.

This means that even an unused card could stand between you and your dream home.

How a Credit Card Affects Your Borrowing Capacity

Let’s take a simple example.

If you have a credit card with a $10,000 limit, lenders may assume that the full limit is drawn when assessing your financial position.

The impact?

It could reduce your borrowing capacity by $40,000 to $50,000—enough to make or break your ability to purchase the property you have your sights set on.

Why does this happen?

It’s all about potential liability. Lenders need to consider your maximum possible exposure to debt, not just your current repayment behaviour.

What Can You Do to Maximise Your Borrowing Power?

Fortunately, there are practical steps you can take before applying for a mortgage:

✅ Cancel unused credit cards

If you have credit cards you no longer use, consider cancelling them before you submit your loan application.

Reducing your total available credit can have an immediate positive effect on your borrowing power.

✅ Use a debit card linked to an offset account

If you like the flexibility of Mastercard or VISA access, a debit card connected to an offset account can offer similar convenience, without negatively impacting your loan servicing calculations.

An offset account can also help reduce the interest you pay on your mortgage.

A Small Step That Can Make a Big Difference

Managing your credit exposure might seem like a small detail, but when it comes to securing property finance, every dollar of borrowing capacity counts.

By taking control of your credit cards early, you can give yourself the best possible chance of buying the property you want, with less stress and more confidence.

Would you like help assessing your borrowing power?
Let’s connect to discuss how smart strategies can help you achieve your property goals.